Volume 19, Edition 11

Ho Ho Ho. Welcome to the holiday season. Thanksgiving is behind us and the holiday rush has begun. Hopefully it will be quiet for all at work so we can all focus on holiday events!

This month we report:

SECRETARY OF TRANSPORTATION NOMINEE – President-elect Trump has announced that he will nominate Elaine L. Chao to head the Department of Transportation. Ms. Chao had been head of the Department of Labor throughout the administration of George W. Bush.

CARGO THEFT REPORT – Freightwatch has released the third quarter cargo report. The number of thefts went up but the value of the thefts went down. This quarter there were 193 thefts, a jump up from 169. The average load value was $120,536. Electronics and Home and Garden products were 1 in 5 of the shipments reported stolen. Food and Beverage loads took up 17 percent of all thefts. California, Texas, Florida, Illinois and Tennessee were the top contenders for the theft locations. What gets stolen more often? 78 percent were full truckloads, with 75 percent of the thefts in unsecured parking. Think about those unattended vehicle endorsements.

NTSB REPORT – NTSB has released its 10 Most Wanted List for the next two years, addressing issues related to transportation crashes across all modes of transportation, including aviation, highway, marine and rail. Fatigue, collision avoidance technology, medical fitness and driver distractions lead the pack of concerns. Technological changes are the main focus of the NTSB wish list, with an expectation that improved technology will minimize crash risk. You can view the whole wish list here.

ANTI-INDEMNITY STATUTES – New York joined the majority of states which have impacted the ability of shippers to require indemnity from motor carriers. New York now precludes provisions in contracts that provide for shippers to be indemnified for losses caused by their own negligence and make those provisions void and unenforceable. Affected contracts in New York are defined as “a contract, agreement, or understanding” between a motor carrier and a shipper covering the transportation of property for compensation or hire by the motor carrier, entry on property to load, unload, or transport property. The protection does not apply to intermodal chassis, containers or other intermodal equipment. The new law took effect immediately. To date, 45 states forbid unfair provisions from contracts. New Jersey was added to the list on Nov. 1. The only states yet to adopt protections are Delaware, Mississippi, New Hampshire, Rhode Island and Vermont.

DISTRACTED DRIVING – The NHTSA has issued guidelines to address distracted driving. The guidelines are designed to encourage portable and aftermarket electronic device developers to create options that reduce driver distraction. The guidelines encourage manufacturers to implement features such as pairing, where a portable device is linked to a vehicle’s infotainment system, as well as Driver Mode, which is a simplified user interface. Both pairing and Driver Mode will reduce the potential for unsafe driver distraction by limiting the time a driver’s eyes are off the road, while at the same time preserving the full functionality of these devices when they are used at other times. You can view the guidelines here.

MEXICAN INTERCHANGE – The FMCSA has lifted its prohibition on the leasing of equipment from Mexican domiciled carriers to US motor carriers regardless of the destination of the cargo. The U.S. carrier must assume complete responsibility for the operation of the equipment.

RELEASE OF DRIVER INFORMATION – Generally cases are reported below, but we thought this was more relevant in the news section. The 1st Circuit rejected a suit by drivers which sought to prevent the FMCSA from releasing non-serious driver related safety violations to employers. The Court of Appeals held that the FMCSA’s obtaining consent forms signed by drivers were not illegitimate and not ambiguous or coercive. The Court held that the interpretation by the FMCSA that it is authorized to release the information should be permitted to stand. (Thomas O. Flock v. US DOT, 2016 WL 6135471)

CASES

CARGO

A reminder to underwriters that motor carriers are liable for loss or damage to cargo even if the loss occurred in the hands of another carrier. The Northern District of Illinois held that an originating carrier was liable for the actions of a delivering carrier under the Carmack Amendment. The Court also held that the Carmack Amendment did not preempt a breach of contact claim against a defendant who might also be liable as a broker. Both causes of action were permitted to proceed. (Mitsui Sumitomo v. Wheels MSM Canada, Inc., 2016 WL 6395428)

A default judgment was granted against a motor carrier in a broker-carrier case in the Eastern District of California. The Court held that the broker was entitled to recover the payment made to the shipper and was also permitted to obtain attorney’s fees under the broker-carrier agreement. (Direct Connect Logistics, Inc. v. Road Kings Trucking, Inc., 2016 WL 6608924)

Another broker got a default judgment as to liability against a motor carrier in the District Court in New Jersey but had to go back to Court to determine the amount of damages and prove that a shipment of food was totally damaged following an overturn. (RLS Distribution v. Small, 2016 WL 6634873)

The Western District in Texas dismissed a complaint against a Hawaiian motor carrier for damage to a shipment of household goods transported from Hawaii to Texas. The Court held that that there was no jurisdiction in Texas over the Hawaiian carrier and that the state law claims which were alleged were preempted by the Carmack Amendment. (Cioppa v. Schultz, 2016 US Dist. LEXIS 156066)

The issue of preemption still comes up every month. The Central District in California once again upheld the doctrine, dismissing all state causes of action in a household goods damage suit. (Crane v Zip2Zip Transfer & Storage ,2016 WL 6839329)

The Middle District of Louisiana also upheld the preemptive effect of the Carmack Amendment, concluding that a motor carrier limited its liability under the Amendment. The Court held that the shipper’s use of the carrier’s on line tool which noted the limitation was enough to establish notice and opportunity (Houston Specialty Ins. Co. v. Freitz Transportation, 2016 WL 6897793)

AUTO

The District Court in Montana did not permit removal of a case a year after it commenced even though the non-diverse party was finally dismissed. The Court held that there was no evidence that the non-diverse party was added in bad faith, enforcing the one year removal rule. The Court also held that the Federal Motor Carrier Safety Act did not give rise to federal question. (Larson v. Fedex Ground Package System, 2016 WL 6602639)

The Western District of Texas held that while one would generally only look at the complaint and the policy to determine a duty to defend, the Court is permitted to consider additional factors which were readily ascertainable, were relevant to coverage and did not determine whether allegations in the complaint were true. The Court held that it could consider whether a vehicle was leased to another business for the purpose of addressing the business use exclusion. The insurer was held not to have a duty to defend or indemnify. (Sentry Select Ins. Co. v. Drought Transportation, LLC. 2016 WL 6236375)

Over in the Middle District of Pennsylvania, the Court rejected a motor carrier’s request to dismiss a punitive damage claim as well as claims for negligent qualification, hiring, supervision, monitoring and training. The Court held that that there was enough evidence that certain parties at the motor carrier may have been aware of problems with the driver and that a reasonable fact finder could find that the motor carrier was aware of the problems and therefore liable to the plaintiff. (Botey v. Green, 2016 WL 6395900)

An excess insurer lost its bid to reject coverage for a serious bodily injury claim when the motor carrier failed to give prompt notice of the loss to the excess carrier. The 8th Circuit held that while the notice was not timely the insurer had failed to establish prejudice or that it attempted to investigate when it finally got notice and claimed the primary insurer had not adequately investigated. (Century Surety Company v. Jim Hipner, LLC. 2016 WL 6892210)

Whether a courier driver was an employee or an independent contractor of the courier service was held to be a question of fact which precluded summary judgment on the applicability of coverage under the courier services business auto policy for the injuries sustained by plaintiff. The 1st Circuit Court of Appeals in Louisiana held that questions remained as to whether the driver’s use of a vehicle in connection with the delivery service business permitted coverage under the policy. (Bouquet v. Williams, 2016 WL 6350854)

The District Court in Maryland granted judgment to an insurer concluding that the temporary substitute clause under a commercial auto policy did not create coverage when the insured hired another party to perform a job. Even though a covered auto was out of service, the whole job was outsourced and therefore the vehicle was not a temporary substitute under the direction and control of the insured. The Court also held that the MCS-90 was inapplicable when the driver could not be considered an insured under the policy. (Titan Indemnity Co v. Gaitan Enterprises, 2016 WL 6680112)

The Western District of Missouri held that plaintiff could not plead a negligence per se claim against a motor carrier based upon federal safety regulations. The Court also held that the plaintiff had not pled a claim for punitive damages against the driver or the trucking company. (Charger v. Register, 2016 Dist. LEXIS 155414)

A plaintiff tried to bring an action in the District Court in Alabama against a tow company for conversion, emotional distress and negligent or wanton supervision arising from the towing of her vehicle. Plaintiff claimed that 49 USC §14501 gave rise to a cause of action which preempted any state law claim and permitted jurisdiction in federal court. The Court held that the claims of the plaintiff were not completely preempted by the statute and that at best the plaintiff had established that she pled a state law cause of action which might be preempted by the statute. The Court rejected jurisdiction in the federal court sending the case back to state court. (Jordan v Blackwell Towing, 2016 US Dist. LEXIS 1499821)